Israel Counts on Egypt Ties to Overcome $1.7 Billion Gas Hurdle

  • Israeli minister responds to Egyptian freeze on gas talks
  • Israel seeks to export to Egypt, Turkey, Greece, Europe

Israel is banking on its “close ties” with Egypt to help restart gas export talks, Energy Minister Yuval Steinitz said, following an Egyptian decision to halt negotiations. Israel is also planning to advance exports to other markets including Jordan, Turkey and Western Europe, he said.

“The State of Israel assigns great importance to its security and energy ties with Egypt in their entirety, and hopes that due to its close bilateral ties, it will be possible to continue to move forward on the gas issue soon,” Steinitz said on Monday. Israel must develop its offshore gas fields quickly to achieve energy security, he said.

Yuval Steinitz

Photographer: Scott Eells/Bloomberg

The Egyptian government ordered its oil and gas arms to freeze talks on importing Israeli natural gas after an international arbitration court ruled that the Arab world’s most populous nation must pay a fine of almost $1.73 billion to Israel. The penalty was imposed after arbitration between East Mediterranean Gas Co., Israel Electric Corp. and companies supplying Egyptian gas through a Sinai pipeline that was repeatedly sabotaged by militant attacks.

The Israeli government can’t intervene in this arbitration, Steinitz said at a Tel Aviv business conference on Monday.

Partners in Israel’s offshore Leviathan gas field said in a filing to the Tel Aviv bourse that talks are continuing with private Egyptian firms that are not part of the arbitration process with Egypt’s state-run gas companies. The parties to the negotiations will continue to work toward obtaining the necessary approvals from the Israeli and Egyptian governments for the supply of gas from Israel to Egypt, the partners said.

Israel’s TA Oil & Gas index fell for a third day, dropping 0.7 percent to 1,009.42, the lowest in two weeks.


Dolphinus, an Egyptian gas-trading company, is negotiating with partners in Israel’s offshore Leviathan field to buy as much as 4 billion cubic meters of natural gas a year for 10 to 15 years. It also signed a deal in March to import fuel from Israel’s Tamar field.

Egypt exported natural gas to Israel until it canceled the deal in 2012 as its wells became depleted and new exploration slowed. It has said that any gas import deal with Israel should include a resolution to international arbitration cases.

Egypt’s decision to suspend the talks may be temporary, Amos Gilad, a senior Defense Ministry official, said in an Israel Radio interview. He also emphasized Israel’s ties with the country as well as Egypt’s role as a stabilizing influence in the region.

“You have to look at the entire picture,” Gilad said. “There is a whole set of interests.”

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